Jim is a recognised professional in helping companies in strategy validation and implementation, including the design of target operating models.
What are the key challenges organisations’ face when managing business transformation?
There are a number of things to consider, the first being how to create a powerful and compelling narrative about the business strategy and roadmap so the leadership and workforce expend discretionary effort above and beyond their normal day jobs to ensure successful delivery. It’s important to keep the story fresh and invigorated so it continues to resonate over a multi year journey.
You then have to agree an end state target operating model (ToM) based on the business strategy with all relevant stakeholders, before you initiate and maintain coherence and alignment around all elements of the new target operating model i.e. technology, organisation, people, process, performance management, interaction with customers, partners, suppliers and regulators
Another challenge is how to sustain this coherence in a dynamic market environment with changing customer needs, possibly an evolving, immature supply chain or emergence of new disruptive technologies.
It’s also important to manage and prioritise the programme scope of work to demonstrate early success, and generate change momentum, while at the same time managing the sourcing, vendor and resourcing strategies as part of a complete programme management framework to balance efficiency, value and delivery risk.
Finally, you need to align the programme execution strategy to the different phases of the transformation road map and help the organisation visualise the journey and most critically manage the practical ownership and delivery of the business case (top down and bottom up).
In your experience, how are organisations approaching managing Business Transformation? What works/what fails?
It varies depending on the size, scale and complexity of change e.g. corporate wide, function or business unit. In some organisations, the transformation is internally led with a single source ‘big four’ or niche consultants supporting the effort. In others, a multi vendor strategy is adopted.
Maturity in the use of third party consultants and, or successful experience in managing a portfolio of business or IT led projects, together with the corporate/ reputational risk profile determines which approach is preferred by the leadership team.
The most successful scenario we have seen in large scale, enterprise wide change is a controlled, multi vendor model where 2 or more suppliers are engaged across discrete work streams with an independent Programme Management (PM), Vendor management (VM) office and Delivery Assurance support office established. This ensures the client gets the best of breed support but maintains control of their own destiny. It provides positive checks and balances i.e. commercial alignment based on demonstrable “show me” events, outcomes and results.
In this model, the business transformation is handled as a strategic initiative, owned and managed at board level rather than delegated further down the line.
What is your experience of the level of internal capability organisations usually have in managing business transformation?
Again this varies from “partially self sufficient” to “unconsciously unaware” of what it will take to drive and sustainably deliver the change.
Normally, we find the more mature and resilient the organisation is in business process management, one of the spine elements of business change, the better the internal capability of managing business transformation and making the change stick.
In your experience, how easy is it for a business leader to know if their organisation has a capability gap?
We normally ask a number of key open questions at the qualification stage of any client engagement to help create greater awareness and understanding. These include:
What are the current strategic themes and business drivers impacting business performance?
What portfolio of capex and opex improvement projects map onto these business drivers?
How coherent is this picture and mapping within the different levels of the organisation?
How is the status of projects and respective performance relayed to management to inform governance and decision-making?
How are decisions made on initiating, maintaining or stopping these projects made?
How is business and IT governance managed i.e. policies, standards and decision making around process, people, IT and data?
What is the track record in the group of companies in successful delivery of change projects; business, function or IT led type initiatives?
What cross-functional support e.g. planning, finance and HR was involved in realising and embedding the change?
What common process and IT models and language exist in the organisation to create a common, aligned view of the business activities?
In your experience, how easy is it for a business leader to find out what the capability required is?
Normally this is quite challenging, as most business leaders have been running the business day to day and may be parachuted into a transformation / programme director job as part of a wider strategic role or a career development plan.
We also see scenarios where an individual is in the twilight of their career, nearing retirement, and it reluctantly becomes a last assignment, so the motivation and vested interest may not optimal.
Assessing internal capability ought to be part of an initial ‘health check’ to be performed prior to designing, and initiating the programme.
How would you suggest approaching developing an internal capability in managing business transformation?
It’s important to invest in a discrete ‘health check’ and external and internal benchmark activity, to shape the programme team capabilities based on data – and not hunches or well meant advice from third parties who have a vested interest in shaping a programme based on their own capabilities, rather than the business requirements that emerge from the independent analysis.
I would also seek out leadership peers of non-competitive companies who have been or are currently in the relevant phases of the journey e.g. strategy initiation, programme design, programme set-up, programme run, sustain and continuous improvement. I‘d ask for the hard questions they wish they had asked at a similar stage of the journey with the benefit of 20/20 hindsight and try to understand the key inflection points in the journey including their proactive role of leadership throughout.
Another key objective is to build a change network both internally and externally from the business and key functions e.g. IT and HR to have low threat, open, honest conversations about opportunities, gaps risks and issues applied to the organisation’s situation.
Only then can you get the programme designed, set up and moving, bringing in expertise to help to deliver, coach and support the transformation leadership or PMO / VMO office. In all probability, you’ll need to augment your “home team” with independent, impartial advisors with a defined purpose to support the business and provide delivery assurance.
You will also need to consider external “peer reviews” with one or two subject matter experts to constructively challenge the last phase and delivery execution plan for the next phase. This can be managed through gate reviews and the QA process.
What advice do you have for business leaders managing Business Transformation?
First and foremost, take the time to shape the programme - ensure that all key stakeholders understand and support the business requirements based on engagement and direct involvement. Do not rush into a programme based on short-term objectives (e.g. head count reduction or cost cutting)
Then you need to ensure that you focus on the business transformation programme and short- term issues and business-as-usual all at the same time, otherwise they will run into each other and result in sub optimal use of limited company resources (FTEs and £££s)
The next stage is to assemble a high-grade programme leadership team from within your organisation – do not accept second best resources – and make it clear from the outset, who is responsible for the “thinking” and who is responsible for the “doing”, underpinned by a clear governance and decision making model.
All the time you should continually ensure business sponsorship, alignment and skin in the game. It sometimes helps depending on the size and scale of change involved, to get a COO or second in command to run the programme day to day so you can involve yourself heavily in leading the senior stakeholder management and communication, as this effort is vital.
Finally, build an internal and external change network with clear objectives and give visibility and transparency to the roadmap and delivery status of the business case. Be honest and open about what is working and what is not.
Formulate any challenges as "wicked questions" to avoid the tendency to "assume" that certain tensions don't exist. Use the energy in these inherent tensions to create sustainable solutions.
What are the top tips you would give other business leaders around building an internal capability in managing business transformation?
Treat the business transformation as an integral part of the on-going conversations in the organisation - realise that the success of any business transformation is to change the conversation, and that the target operating model (ToM) is to enable the continuously emerging, sustainable conversations to happen successfully.
Build a strategic vision, approach and operating model for the sustainable change capability or function including a resourcing/ funding model paid for by the business.
Draw up a picture of how this approach would mature and intersect with the current transformation programme (in the “run” and the “embed & sustain” phases) before you recruit and stand up the new CoE organisation. Show how key elements of the operating interface with and support the business and functions.
Create a business case for the internal function or centre of excellence (CoE) which is approved by the executive board i.e. baseline comparative performance versus an agreed competitive peer group, illustrate the enterprise value opportunity (head room performance gap) then drive continuous improvement measuring and reporting value as you go.
Jim Gunn is a BIE Assocuate and has over 26 years of strategy, operations, and commercial experience in the British Army, oil and gas industry and business consulting with PwC.
Jim is a recognised professional in helping companies in strategy validation and implementation, including the design of target operating models. Jim has helped companies’ design, set up and run successful transformation programmes in Europe, US, CIS and Asia with a focus on global process driven change enabled by IT solutions to improve operational efficiency and decision making. Jim has acted as an independent assurance director on a number of programme steering committees, reporting to the boards of G100 and FTSE listed companies.